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Last Updated : Jun 11, 2019 03:00 PM IST | Source: Moneycontrol.com

AMFI Monthly: Credit risk funds see massive outflows in May; equity fund inflows up 17.5% MoM

Under the income/debt oriented schemes, another category that saw significant outflows were low-duration funds that registered outflows of Rs 2,353 crore in May.

Himadri Buch @himadribuch

The 43-player mutual fund industry witnessed a whopping Rs 4,155 crore worth of outflows from credit risk funds in May.

In April too, credit risk funds recorded outflows of Rs 1,253 crore, according to data released by the Association of Mutual Funds in India (AMFI).

"The recent credit default events in NBFCs have taken a toll on the credit risk funds. As credit risk funds by default take credit risk and such event are credit events prompting investors to pull out," said a chief investment officer from a private fund house who did not wish to be named.

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The back-to-back downgrade of debt instruments from IL&FS and Dewan Housing Finance (DHFL) by rating agencies has hurt credit risk funds.

Since April, AMFI has followed a new format to release data, as mandated by Sebi. The format requires categorisation of schemes into various segments, open-ended, close-ended, and equity-oriented schemes.

Under the income/debt oriented schemes, another category that saw a significant drop was low-duration funds that registered outflows of Rs 2,353 crore in May.

Commenting on the May 2019 monthly Mutual Fund data, N S Venkatesh, Chief Executive Officer, AMFI said, "On the debt side, investors can take advantage of declining interest rates to invest in Gilt and high-quality income funds."

Net inflow outflow May and April 2019

Last month, liquid funds used by companies to park surplus cash recorded inflows worth Rs 68,582 crore, albeit the inflows fell from Rs 89,778 registered a month ago.

According to the AMFI data, inflows in banking and PSU category increased to Rs 3,381 in May compared to Rs 2,792 crore in April.

The average Assets Under Management (AUM) of the mutual funds rose to Rs 25.43 lakh crore in May. In the same month a year ago, AUM was at Rs 23.27 lakh crore.

Fixed Maturity Plans (FMPs) witnessed a net outflow of Rs 1,797 crore in May as against Rs 17,644 crore in April, while net outflow from the overall debt-oriented schemes category stood at Rs 2,000 crore in the month under review, as per AMFI.

In recent months, the mutual fund industry grappled with redemption pressures in the wake of the debt crisis at various groups, including IL&FS, Essel and DHFL. Some fund houses have also deferred payouts to investors in fixed income schemes.

Equity schemes 

On the equity front, net inflows into equity mutual funds saw a rise of 17 percent from the 61 percent plunge in April. The inflows in equity funds including equity-linked savings schemes stood at Rs 4,968 crore compared to Rs 4,230 crore in April.

"The retail fund flows would now hereon, further strengthen on the back of political stability, promise of further economic reforms and improving macro-economic environment coupled with healthy corporate earnings growth," Venkatesh said.

The mutual fund industry cheered the 2019 General Election verdict as it portends a stable government for the next five years, which turned to positive sentiment in the stock market.

“Post clarity for markets with a clear election mandate, it is encouraging that equity inflows saw an overall increase of 17% for the month of May, with a sharp increase in Mid Cap Fund inflows which were up 160%, and Small Cap Funds up 50 percent," said Vishal Kapoor, Chief Executive Officer, IDFC Mutual Fund.

"We also saw a 5X month-on-month jump in inflows for Focused Funds reflecting an increasing risk appetite amongst investors," Kapoor added.

Modi wave swept markets as on May 23, the day of election results, Sensex for the first time touched the 40,000 level. On the same day, Nifty too crossed the key 12,000 mark and set a new record high.

At the end of May, both Sensex and Nifty rose 1.5 percent each from April.



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First Published on Jun 10, 2019 02:43 pm
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